IATA’s NDC | New Distribution Capability as the Solution

NDC is a technology standard that uses API (Application Programming Interface) connections for airlines to provide content to end-users through travel agents and direct channels. The stated goal of the NDC is to improve airline product differentiation by allowing them to make personalized offers, display different content and branding for each airline, particularly for ancillary services, and offer a transparent purchasing process. 

The success of this initiative depends to a large extent on airlines and partners adhering to IATA standards and obtaining the necessary certifications to distribute content.

The IATA NDC complements the merchandising technology with rich content and branding and continues to work closely with IATA and the airline enterprises to present industry-leading content through travel commerce platforms. 

As airlines seek to maximize their ability to distribute NDC content, travel agencies are becoming increasingly focused on providing agents with an efficient and cost-effective way to access this content (as well as ATPCO and API content) through their booking workflow. 

What Happened Before IATA Presented New Solution Back in 2012?

Before the GDS era, airline ticket orders were placed over the phone. In the 1960s, airlines developed digital tools to automate the way they search and sell their fares. These systems became better known as Global Distribution Systems (GDS) and it was a technology that completely transformed the way people bought their tickets and, consequently, their way of traveling.

The GDS, or Global Reservation System, which is controlled by companies that provide technology solutions systems (such as Amadeus, Sabre, or Travelport) for the travel industry, is the system that travel agencies mostly use worldwide to buy airline tickets. 

The procedure in this system is – the airlines set fares, ancillary services, and rules and pass them on to the GDS companies, who create a product with standardized pricing systems for all airlines. 

From that point, the agencies have access in real-time and can compare the offer for all airlines. The companies that provide this service are also known directly by their name.

Starting in 2012, IATA started promoting a new airline distribution standard. For many, it was seen as a way of skipping GDS distribution (and their corresponding distribution fees) but in reality, its technology can be adopted by all agents in the air sales and distribution sector: travel agencies, aggregators, and GDS.

So, How “New” Is This New Distribution Capability?

The acronym stands for – New Distribution Capability, however, this is not a change in the business model, but rather in technology. 

It’s a protocol or technological standard, through API (Application Programming Interface) connections, used by airlines through their direct channels (their web pages) and to connect with travel agencies.

Why Are Airlines Increasingly Moving to the NDC?

It allows them greater control over their products, improves their differentiation, increases the number of services to sell, and personalizes the offer, thus increasing their income. 

Now it’s not only about selling passenger seats but also ancillaries (ancillary services), such as express check-in or limousine transfers. In short, the goal is to obtain greater passenger loyalty.

The system for travel agencies, and therefore, for the end customers is nothing should be a set of various advantages. Since the purchasing process is transparent and improves the experience through the optimal use of technology (the information is shown with visual content and in a friendly interface).

For all this, the airlines associated with IATA have proposed that GDS and agencies go through the hoop of integrating the NDC language in their sales systems. Even though this implies a series of investments to adapt to the new standard that, although can be compatible with the GDS system, turns out to be a little challenging and requires a period of adaptation.

The industry’s biggest concern is the need to ensure that all parties are involved in standard development across an industry supply chain, which is long and winding.

NDC Brought Progressive Innovations & Opportunities 

Some enthusiasts saw the NDC as a revolutionary initiative that would go beyond technological disruption and challenge the way the industry was operating. Others saw it as merely an evolution in the way airlines present and sell their products. But since 2012, regardless of which side of the debate you are on, more and more prominent names of the industry are working to facilitate the implementation of the NDC.

Fast forward to 2021 and the most recent IATA figures confirm that 66 airlines already use the NDC standard and estimate that 90 plan to use the standard by 2020.

In the nearly nine years since the NDC was announced, the industry has seen the first implementations of the technology standard in various forms by airlines, startups have erupted, and the conversation now turns to collaboration.

As we mentioned before – The success of this initiative will largely depend on the airlines and partners that adhere to the IATA standards that are based on obtaining the necessary certifications to distribute content. 

These certifications for technology providers that offer NDC products (for airlines and travel agencies) progress on several levels. As you make adjustments to your systems, you will gain different levels of NDC capability.

Adaptation by Airlines

Airlines need to develop API capabilities that allow them to display visual content, as well as provide a more transparent shopping experience for agents. Most of the low-cost companies have been distributing via API from the beginning and that has given them a great advantage in the distribution process. 

Because travelers are mainly looking for mobile technology to “improve the efficiency of their travel experience”, which includes everything from check-in and check-out applications, to access to airport maps and details on flight connections. 

Providing this level of customization can only be achieved by leveraging this technology and airlines must take steps towards APIs to keep moving forward.

Through APIs, airlines can offer NDC content across all distribution channels and offer more than just seats and reservations. And with that, both small travel agencies and corporate ones, when searching and booking flights, have more travel content and more access to ancillaries (ancillary services).

An API-connected merchandising platform is a foundation for providing NDC content.

A Gradual Process Of Overall Development

All parties seem to have recognized that these changes will benefit everyone in the industry. But none of this happens overnight.

Fortunately, airlines are aware of this and have accepted the importance of a more gradual strategy. Because API technology takes time to develop and implement. Airlines cannot change their distribution model by magic. It is a slow and continuous process.

One of the parts of this airline distribution business, and a very important one in terms of profits generated for airlines, is the travel agency community. For them, adopting NDC technology standards also means big changes in the way they work. 

Agents and intermediaries need access to many airlines, as well as other types of travel providers (hotel reservations, car rentals, trains…) to be able to create itineraries for their clients. 

The transition to this new model must be carried out smoothly so that travel agencies continue working as they did until now. 

The GDS Must Also Transform the Set of Technologies That Underpin Its Platforms

Consequently, the API distribution must also be incorporated by the GDS, as it’s now considered the keyway to allow airlines to present and sell their products and ancillaries, and organize the content according to the way of searching and booking trips that travelers demand every day.

Faced with the great threat of being left out of the game, the GDS has not hesitated to proceed to integrate this new technology into its traditional systems. Global distribution systems will intend to provide agencies in a single workflow both contents, the traditional, and the new NDC so that they do not have to use two different environments for each solution.

How Can Travel Agencies Access the NDC Content?

NDC will enable the travel industry to transform the way flight products are delivered to businesses and corporate and leisure travelers by addressing the industry’s current distribution constraints: product differentiation and time-to-market, airline services, and varied flight content.

This is the philosophy behind the NDC developed by IATA and applied by the association itself. NDC is an XML-based technology standard that allows data, such as passenger reservation information, to be transferred in a common way over the Internet. 

Thanks to this technology, airlines can distribute their content to agencies and travel management companies, and third parties in a single transaction, seamlessly, either directly to the consumer or through an intermediary.

As for the ability to access the NDC content – Travel Agencies worldwide are faced with three possibilities to form a connection with this standard:

NDC Aggregators

An aggregator is an NDC technology company that aggregates content from different NDC airlines and provides it through one normalized API (Application Programming Interface). Travel agencies need to integrate that API into their own applications or travel sites. Through that one interface, they will be able to search for travel deals across multiple NDC airlines that the aggregator has connections with.  The API will also offer all NDC functionality like creating a booking (order in NDC terms), selecting seats and bags, servicing the booking (order modifications).

Considerations to take into account when working with Aggregators:

• You only need to integrate with one API to access all NDC airlines provided by the aggregator, instead of having to integrate with each airline individually.
• There must be a developer on board to connect to the aggregator so you need to take into account the cost of integration, time to develop an aggregator’s booking fee.
• You will also need to aggregate that NDC content with the content you get from GDS.
• The integration gives you the freedom to design your own user interface and user interaction with your travel site.

As of this moment, there are 46 registered NDC aggregators on the IATA website and you can search all of them at the following link.

Global Distribution Systems (GDS)

GDS also aggregates content from various NDC airlines. They typically integrate it into their existing APIs, tools, and process flows. NDC search results should not be too different from the ones travel agencies are used to. Travel agencies can use their traditional GDS tools (like agency selling platforms) and/or integrate with GDS API if they have their own travel site application. For travel agencies with development teams that are familiar with GDS API, it should not be too complicated. 

Considerations to take into account when working with Aggregators:

• You can probably use the existing API integration that you already have with some changes related to NDC.
• If you are integrating GDS for the first time, you will need to have a development team do that for you.
• In both of the above cases, with one API you have access to all NDC airlines provided by the GDS, instead of having to integrate with each airline individually.
• You need to have a developer with GDS experience on board to connect to GDS so you need to take into account the cost of integration and time to develop. 
• The integration gives you the freedom to design your own user interface and user interaction with your travel site.

NDC Sellers 

NDC sellers are typically traveling agencies and online booking tools that provide NDC content to their customers. They also aggregate NDC content either through Aggregators, GDS, or direct connections to NDC airlines. They usually offer a complete turnkey solution for travel agencies that do not want to develop online booking from scratch. In addition to NDC content, they provide GDS and possibly Low-Cost Carriers content. 

As of this moment, there are 33 registered NDC resellers on the IATA website and you can search all of them at the following link (Thomalex is one of those 33 NDC sellers).

Considerations to take into account when working with NDC Sellers:

• You do not need to develop an application to get access to NDC airline content as it is provided directly in the NDC Seller booking tool, which can save you the development cost.
• In this case, also, you will have access to all NDC airlines provided by the Seller, instead of having to access each airline individually.
• Seller booking tool will most probably provide you with NDC, GDS, and Low-Cost Carriers content in one place.
• As in most cases, you will be using a white label solution, so you will not have control over the design of the user interface as you will be using the one designed by the Seller.
• Some Sellers might have an API as well with aggregated NDC, GDS, and Low-Cost Carriers content in one place.

In Conclusion 

In the new era of multi-source content distribution, NDC can provide dynamic pricing and product information to create the final offering that can be distributed to all partners. 

It also facilitates a better price comparison experience, with which agencies can reserve, pay and issue a ticket. All of these are key functionalities to offer the personalized offers that the new distribution era demands.

This is a significant change. But it’s also an important opportunity not only to bring travel agency airline distribution to the world but also to build a different relationship between all parties. One that recognizes the value that each side appreciates. 

After all – the profitability of the sector can only be maintained if each party is transparent and to, by default, recognize the real value of their role in this new era.